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Strategies & Market Trends : Mish's Global Economic Trend Analysis

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To: ild who wrote (17860)12/7/2004 2:28:49 AM
From: mishedlo  Read Replies (2) of 116555
 
The 12 eurozone members have urged the US to take action to address the "excessive volatility" of exchange rate movements seen in recent months.

In a thinly veiled reference to the US, the 12 finance ministers have called for "all major countries" to put policies in place to tackle the issue.

Eurozone members want the US to rectify its huge trade and budget deficits.

......

EU finance ministers want the US to take action to rein in its widening current account shortfall.

"It is unacceptable that Europe should pay the bill for major imbalances in the world economy, especially in the (deficits) in the US," Austrian Finance Minister Karl-Heinz Grasser was quoted as saying by Agence France Presse.

'Slide must stop'

Earlier on Monday, French Finance Minister Herve Gaymard, said the slide in the dollar against the euro "should not continue".

Mr Gaymard said it was a matter for US and Asian monetary authorities, as well as European.

German workers
The weak dollar is hurting European economies including Germany
"The euro has increased in value since its creation by almost 60% compared to the dollar, since we were at about 80 euro centimes and we are at 1.34 or so at the moment," he told LCI television.

"This slide should not continue.

"It is obvious that the solution, as you well know, is not only in Europe, it is also in the attitude of the American monetary authorities and also in that of the Asian monetary authorities."

Twin deficits

In Asia, traders are watching for signs the Bank of Japan would sell its currency and financial authorities there stepped up their rhetoric.

Economists warn that the dollar is likely to continue weakening, because of the so-called "twin deficits" of the US economy.

Both the US Government's budget and the current account - the measure of the difference between financial flows going in and out of the country - are deep in the red.

As a result, the US needs to suck in as much as $2.5bn in investment each day, creating a buyer's market for dollar assets and pushing the greenback lower.

news.bbc.co.uk
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